ICICI Direct is bullish on Tata Global Beverages has recommended buy rating on the stock with a target price of Rs 250 in its research report dated May 16, 2019.

Tata Group has announced demerger of Tata Chemicals’ (TCL) consumers business into Tata Global Beverages (TGBL). As part of the deal, TCL’s consumer business, which includes sourcing, packaging, marketing, distribution & sales of its Tata Salt, pulses & spices under Sampann brand, snacks business and detergent powder, Tata Dx, will be transferred to TGBL.

Outlook

We value consolidated branded business at 3x P/Sales, international business at 1x P/sales & Starbucks JV at 2x P/Sales on FY21E revenues, respectively, with a revised target price of Rs 250/ share.

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